Magazine: Shortages: From microchips to potato chips

Zoltán Fekete
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Branded Goods Association Hungary

But the next allusion is more prosaic when he draws a parallel between the rugged action hero of the Die Hard series and the average FMCG CEO who had to survive so many sudden blows last year. There was a quick bounce back in global economy from Covid but perhaps the recovery was too forced and quick. Though fully on two feet now, our business heroes are still dizzy trying to find a balance and firm ground. Supply has still been lagging behind demand and skyrocketing labour and material costs also led to an unprecedented level of inflation. The current war conflict with its embargo responses also hinders the smooth transition to a healthier economy.

Almost any government in the world reacted in the same way to the Covid lockdowns and supply chain disruptions, mostly by swift and direct intervention providing consumers with extra income. Similar measures also prevail in Hungary, with a cap on consumer energy prices, double-digit salary growth, and numerous other extra resources for the people, especially in the campaign period before the general elections. The million-dollar question for this year might be what kind of measures there are for the government to strike a healthy balance between preserving social peace (read: low prices) and the competitiveness of the local businesses (read: higher prices).

In Hungary, the recent income tax refund, the salary increases, the extra month pensions, and many similar fiscal boosters resulted in a record retail sales growth of 16.2% in Q1 2022. The other side of the coin is that the inflation rate was 9.5% in April – the highest in the last 20 years. In the general elections Hungarians seemed likely to vote on security, stability, and continuity; and, in theory, political stability entails economic stability. However, one cannot be sure how long domestic consumption can drive growth in the current high inflation context. Budget amendments are likely to come, and this often starts with special sectoral taxes. There are further challenges ahead for brand manufacturers, just to mention the uncertainties with the transition to circular economy (read: unknown costs of the new packaging waste systems) or the continued success and growth of discounters. Sure we will all look forward to interesting times (read: difficult and hectic years). //

Strong Brands for a Strong Hungary

Established in 1995, BGA Hungary is the collective voice of the local FMCG brands. Our mission is to create for brands an environment of fair and vigorous competition, fostering innovation and guaranteeing maximum value to consumers now and for generations to come. We believe that our brands help create a strong economy, rich culture, and prospering society. //